I write about the Internet technologies and upstarts that are disrupting advertising and media faster than ever. I'm living this disruption, so I might as well write about it, too. I spent nine years as chief of BusinessWeek's Silicon Valley bureau writing about the leading edge of technology and business, and I continue to do so for a variety of publications. Follow my posts here by clicking the "+ Follow" link under my name. You can also find me at my personal Web site RobHof.com, follow me on Twitter (robhof), Circle me on Google+, subscribe to me on Facebook, and email me (robert.hof@gmail.com).

The Amazon Phone Will Be Anything But a Phone

If Amazon ends up making a phone for sale late next year, as Citigroup analysts were predicting today, you can almost count on one thing: The phone will be the least important piece of it.

After all, look at the iPhone. The late Apple chief Steve Jobs always said it was a computer more than a phone, and (for better or worse), he was right. IPhone owners may use it to make calls, but the reason they can’t live without it is that it’s an Internet-connected computer that works anywhere.

That’s why I think that, amid the hand-wringingcritiques of Amazon’s supposed intentions to invade Apple’s turf, Amazon CEO Jeff Bezos has to have several other things in mind if he actually ends up releasing something resembling a phone. Here are a few guesses at what an Amazon Phone might really be aimed at:

* Amazon Instead: An Amazon phone could make a really handy price-comparison device. Nobody outside a few nerds drags a laptop into a store to check prices, and I’m doubtful many people will do that with a tablet either. But a phone? You can already use apps to scan barcodes to find the lowest prices online or in a nearby store–including one introduced yesterday by Decide.com (which I think just became an Amazon acquisition target).

And the fact is that often enough, the lowest price is going to be on Amazon.com. What’s more, if you’re one of an increasing number of people who are Amazon Prime subscribers, it would be dead easy to scan the product in the store you want, see it’s cheaper on Amazon, maybe even with the $3.99 Prime next-day delivery, click (once! This is patented-one-click Amazon, after all), and find it on your doorstep the next day.

* Amazon Remote: Already, smartphones are getting used as replacements for TV remote controls. Given Amazon’s focus on content with the Kindle, an Amazon phone would make a nifty remote that could help you not only find shows and movies but also choose a free version on Amazon if it’s available, for instance.

In that way, Amazon could become a key distributor of content, upping the ante in the battle royale with Neflix, Hulu, cable companies, and even Google and Apple. Amazon as cable TV provider? I’ve heard crazier things.

* Amazon Offers: Finally (and not simply to justify my writing about this in a blog ostensibly on Internet advertising), Amazon may well see an opportunity to build a larger ad business. It already offers one Kindle whose low price is subsidized by “special offers,” i.e. ads on its screensaver.

Amazon also knows precisely what its customers buy, which is why it often makes useful recommendations on what else you might be interested in. If it also knows where you are (from GPS tracking on your Amazon phone if you allow it), it could suggest places in the physical world to buy those products when you’re nearby a store carrying them. Amazon has for years found ways to make money by referring people to other online retailers, essentially pricing such referrals at a level that make it agnostic as to whether it sells you the product or lets a partner do it. There’s no reason it can’t do the same with physical retailers.

Amazon also has made a big push on daily deals a la Groupon with AmazonLocal, and it’s easy to see how those offers might be quite a bit more effective if they hit people’s screens while they’re actually near a restaurant that has an offer.

And going back to the Amazon Remote idea, why couldn’t Amazon take a small cut of video rentals when people choose to watch a show on Netflix or Hulu if Amazon itself doesn’t offer it?

All this is extremely speculative, of course, so take it with a grain of salt. But what I’m more sure about than anything specific here is that Jeff Bezos cares little about invading somebody else’s turf. He’s much more interested in discovering entirely new places to make money. That’s most likely what he would attempt to do with an Amazon Phone.

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